CLPHA participated in a call this morning with HUD to discuss next steps in the implementation of the Small Area Fair Market Rent Rule (“Rule”) in light of the preliminary injunction was granted in the Open Communities Alliance litigation challenging HUD’s suspension of the Rule (see CLPHA Update 1/3/18). Participants on the call included officials from HUD’s Offices of Policy Development and Research (“PD&R”), Public and Indian Housing (“PIH”), Housing Choice Vouchers, and General Counsel. Below are the major takeaways from the call:
- Effective date of April 1, 2018: HUD announced that full implementation and compliance with the Rule and the to-be-issued guidance will be effective as of April 1, 2018.
- Comments due January 11, 2018: HUD encouraged all interested parties to submit comments in response to HUD’s December 12, 2017 “Notice for Suspension of Small Area Fair Market Rent (Small Area FMR) Designations; Solicitation of Comment” Docket No. FR-6070-N-01. Comments are due by January 11, 2018 and may be submitted by mail or electronically atwww.regulations.gov. We will be submitting comments accordingly. We request members to provide us information regarding adverse rental housing market conditions specific to your area so that we can, in turn, include in our comments to HUD.
- Substantive Issues Addressed
- Request for suspension of Small Area FMR designation – HUD noted that the Court in theOpen Communities Alliance litigation did not invalidate any portion of the Rule, but rather concluded that HUD did not properly suspend the Rule’s implementation. HUD went on to clarify, however, that HUD still has the discretion, on a case-by-case basis, to suspend a Small Area FMR designation for a particular area or temporarily exempt a PHA from using the Small Area FMRs based on documented findings of adverse rental housing market conditions. While HUD is working on guidance to instruct PHAs on how to request such a suspension or exemption, HUD is aware of the difficulties PHAs face given the short implementation timeframe and encourages PHAs not only to highlight these difficulties by submitting comments to its December 12, 2017 Notice, but also to submit these difficulties in any forthcoming suspension or exemption request for HUD’s consideration.
- Administrative fees – PIH was not able to provide feedback regarding whether PHAs will be provided increased administrative fees to assist in the implementation efforts, as was done for the demonstration project participants using extraordinary administrative fees.
- FMR “groupings” – While HUD will continue to issue Small Area FMRs at the zip code level, HUD also encourages PHAs to create Small Area FMR bands using the surrounding zip codes that fall within the 90%-110% FMR range. HUD acknowledged that such groupings are not specifically authorized under the Rule but noted that they will be addressed in the forthcoming guidance materials.
- Guidance forthcoming: HUD anticipates issuing implementation guidance materials by mid-January. This guidance will include:
- PIH guidance document(s)
- Technical assistance task order(s)
- A dedicated technical assistance page on HUD Exchange
- FAQs document(s)
- Guidance regarding the process for requesting Small Area FMR suspensions
The guidance materials will include information on best practices, outreach to tenants, managers, and owners, impact on current technical and organizational systems, and other similar information. HUD also committed to using the findings from the Small Area FMR demonstration project to inform such guidance materials.
If you have any questions about HUD’s Small Area FMR Implementation, you can email or call (202-638-1300) Research & Policy Analyst Nicole Barrett (email@example.com) or Deputy Director Deb Gross (firstname.lastname@example.org).
On January 17, 2018, HUD issued guidance “to help PHAs better understand their options” under the Final Rule but cautioned that HUD would likely “amend and extend this guidance once it has received and evaluated the complete results of the Small Area FMR Demonstration Evaluation.” Consistent with previous direction from HUD, the guidance states that full implementation and compliance is expected “no later than April 1, 2018.”
We have identified a number of issues with the guidance and plan to address these issues with HUD:
- Section (4)(d)(ii) – HUD has committed to issuing a separate notice addressing procedures for which designated and opt-in SAFMR PHAs may request approval for exception payment standards exceeding 110% of SAFMR. When will this notice be issued?
- Section (4)(e) – HUD has stated that a “PHA’s Administrative Plan must indicate how it will handle decreases in the payment standard” during the term of a HAP contract and has identified three policies PHAs to address such decreases. This raises timing concerns for PHAs, as formal PHA administrative plan review processes required to implement such changes may delay adoption of such changes past the April 1, 2018 compliance deadline.
- Section (6) – HUD has exempted MTW PHAs in mandatory SAFMR areas provided “that agency has an alternate payment standards policy in its HUD-approved Annual MTW Plan.” However, HUD referred to “alternate rent policies” in the Final Rule when it addressed exempting MTW PHAs. Is this a substantive change or is HUD using “alternate rent policies” and “alternate payment standards” interchangeably?
- Section (9)(b) – HUD has advised that PHAs may request either a suspension or a temporary exemption from SAFMRs by submitting a request to SAFMRs@hud.gov.However, HUD has not clarified what PHAs are required to do while the suspension/exemption request is pending; nor has HUD established review and approval timeframes for such requests.
- Section (9)(c) – HUD has provided a nonexclusive list of adverse rental housing market conditions to support a suspension/exemption request. However, HUD has not provided sufficient guidance on the type of documentation PHAs will be required to include in such requests.
Please advise if you have other issues or questions you would like for us to address with HUD as well.
Update on comments submitted through January 11, 2018 re: Docket No. FR-6070-N-01, Notice of Suspension of Small Area Fair Market Rent (Small Area FMR) Designations
In total, 47 comments were submitted (48 separate submissions with 1 duplicate). Comments in support of HUD’s suspension of the Final Rule were submitted by 4 PHAs and 7 trade/industry groups, including CLPHA. More than 50% of the comments submitted were by advocacy groups, civil rights groups, housing mobility entities, and academia all in opposition to HUD’s suspension.
On December 28, 2017 HUD sent a letter to housing authority executive directors regarding Housing Choice Voucher (HCV) renewal funding during calendar year 2018 (CY18). Given that HUD is currently operating under continuing resolution (CR) funding for fiscal year 2018 (FY18), the letter was to inform housing authorities of the funding possibilities that would affect renewal funding calculations and awards once a full year CR or appropriations bill is enacted.
According to the letter, HUD evaluated the two funding bills separately offered by the House and Senate appropriations committees. Based on HUD evaluations, the Housing Assistance Payments (HAP) prorations would be 98.810% (Senate) and 95.301% (House); and the administrative fee prorations are anticipated at 76.153% (Senate) and 70.233% (House). The proration levels were calculated by estimating the full HCV program need for 2018 and comparing the program need to the available funding.
According to the Center on Budget and Policy Priorities (CBPP), the number of leased vouchers fell by 22,000 from February to September 2017 due to the 2017 renewal funding prorations under the CR and final 2017 funding levels, and the decline is reflected in the Voucher Management System (VMS) data that HUD is using to produce its eligibility estimates.
Given the funding levels proposed in the House and Senate bills, and the estimated proration levels, the HUD letter implies a 2018 renewal formula eligibility of $19.6 billion, which is $230 million above the Senate proposal and $900 million above the House level. Attached is a chart estimating the state-by-state loss of HCV units according to the separate House and Senate proposals. This chart should be helpful in your advocacy.
Since the Senate bill represents a $230 million shortfall and the House bill has a $900 million shortfall, we urge CLPHA members to reach out to their members of Congress to ensure HCVs are fully funded in any final FY18 appropriations.